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It's a 'best matching,' system. IF site A and site B are optimized in the same way (same ON PAGE and same OFF PAGE), and Site A has the exact phrase (e.g., Medical Malpractice ATTORNEY in San Francisco) and Site B is just a little off (e.g., Medical Malpractice LAWYER in San Francisco), then Site A will win.

Google calls this 'every word matters.' Also word order matters as well.

But, this is relevant ONLY if all factors are equal. In many cases, Site B might have stronger links, or better organization, etc., and thereby can 'beat' Site A even though Site S has a closer match to the query.

The Google algorithm is not ONE single factor, but rather a bunch of factors working TOGETHER. You can't reduce it to one single factor. (In logic, I think that is called the error of reductionism).

So, the bottom line for you and me, is to ALWAYS try to get as close as possiblet to how a potential customer searches, and optimize on that. The customer is NEVER wrong in terms of SEO.

Another concept to grasp. You don't have just one shot at all this. You can have ONE page optimized on HOUSE and another on HOME. Part of good SEO is just generating a lot of micro content; hence blogs and blogging are wonderful for SEO!

there are algorithms that have been developed that can read the new york times and report semantic details from it, in ways that might mirror human language learning.

These algorithms can pass things like the GRE and major university entrance exams.

Speaking of word choice, it's really annoying when people capitalize certain words for emphasis, especially when it's several words per sentence.

http://computer.howstuffworks.com/internet/basics/google1.htm